US trade gap shrinks

The US trade deficit shrank in February as a slowdown in demand both at home and abroad hit imports and exports, prompting analysts to scale back their forecasts for US economic growth in early 2011. The trade gap totalled $45.8 billion, down 2.6 percent from January despite another monthly rise in oil prices to their highest since October 2008, the Commerce Department said on Tuesday.
-- Imports fall 1.7pc, exports slip 1.4pc
The impact of the oil price jump was tempered by a drop in the volume of oil imports to the lowest in 12 years. A separate Labour Department report showed petroleum prices surging 10.5 percent in March, suggesting bigger trade shortfalls ahead. Analysts at RBS in Stamford, Connecticut agreed, trimming their estimate of first-quarter growth to 1.7 percent on an annualised basis, from 2.0 percent previously. The trade report "shows there are headwinds for the global economy ... There are lot of geopolitical uncertainties weighing on trade," said Michelle Meyer, senior economist at Bank of America Merrill Lynch in New York.
US exports, after rising in each of the previous five months, fell 1.4 percent in February to $165.1 billion. That was led by a $1 billion drop in auto and auto parts exports, with smaller declines for other major categories. Services exports rose just enough to set a record. US imports, which like US exports have roared back from the depths of the global financial crisis in 2008 and 2009, fell a larger 1.7 percent in February to $210.9 billion.
Automotive imports fell $2.3 billion, followed by a $2.1 billion drop in capital goods. Imports of consumer goods rose $2.3 billion in February. The average price for imported oil rose for the fifth straight month in February to $87.17 per barrel. A Labour Department report showed imported petroleum prices jumped 10.5 percent in March, the most since June 2009, after rising 4.0 percent in February.
Along with a 4.2 percent rise in imported food prices, which was the most since July 1994, that pushed overall import prices 2.7 percent higher, their largest increase in more than 1-1/2 years, the report said. The International Monetary Fund downgraded its outlook for US growth this year to 2.8 percent in its World Economic Outlook released on Monday. It had forecast 3.0 percent growth in its January report. A US government report due out on Friday is expected to show overall consumer prices rose a relatively steep 0.5 percent in March for the second month in row, while core prices excluding food and energy rose 0.2 percent.